From COLI to C.A.R.E.™

COLI: Advantages and Concerns

Company-owned Life Insurance (COLI) is simply a policy purchased by a company wherein the company is the policy’s sole or partial beneficiary. Encompassing Bank-owned Life Insurance (BOLI), Credit Union-owned Life Insurance (CUOLI), and Insurance Company-owned Life Insurance (ICOLI), COLI is an attractive tool for a number of reasons, providing:

  • A tax-efficient way to fund employee benefit programs
  • Protection against the loss of key employees
  • Income through tax-deferred cash surrender value (CSV) growth
  • Tax-free death proceeds

This last point, though advantageous, can also be a cause for concern.

Addressing a Sensitivity

The idea of benefitting from the insurance component is a sensitive one for many companies. The team at The Galbreath Group – a leading advisor to financial institutions on corporate insurance – conducted some research to fully understand this objection. We discovered that a major reason for the discomfort is that companies feel that the death benefit doesn’t align with their culture and purpose, which includes helping and serving others, such as their employees, their communities, and other charitable endeavors.

After weighing these comments, it occurred to us that the insurance component could be used to support the companies’ missions. If collecting death benefits engenders so much apprehension, why not give some or all of it away? Doing so would not only eliminate the negative stigma associated with the insurance component, but transform it into perhaps the most positive attribute. Thus C.A.R.E.™ was born.

Leveraging the proceeds from any form of COLI, C.A.R.E.™ strengthens community engagement and establishes a charitable legacy for both companies and their employees.